USDA reported this week that lower-than-expected slaughter and marketing in the past three months have dampened some of the price outlook for beef and pork. Even so, fed cattle prices continue to hover at the $90 level ... and retail demand for pork remains strong.
The livestock outlook by USDA was part of the agency's big October crop report, which provided some pleasant surprises for a market expecting the worst.
In a marked example of commodity market reaction, the trade this week pushed grain and oilseed prices higher following the release of USDA's October crop projections. The official numbers showed an increase in production for most major commodities, but with the exception of corn, stayed well below trade expectations. That trend proved friendly to prices.
Here are the official projections:
The corn crop was pegged at almost 10.9 billion bushels, the second largest harvest on record. That number fell right in line with trade guesses, and was some 218 million bushels above USDA's September projection.
The soybean harvest is projected at nearly 3 billion bushels, some 111 million bushels above last month's prediction.
And the cotton harvest was increased by 1.2 million bales over the September guess to 22.7 million bales.
Traders also were tuned in to USDA projections on the 2005/2006 carryout. Ending stocks for soybeans were substantially lower than what the markets expected. And the wheat carryout dropped more than 15 percent over USDA's September projection to 530 million bushels.
Bottom line: The USDA reports were positive to the bean and wheat markets ... and neutral to corn.